Hawaii governor vetoes online lodging tax-collection bill

HONOLULU (AP) — Hawaii Gov. David Ige vetoed a bill that would have allowed online lodging services like Airbnb to collect taxes, delving into a debate about whether websites should be held responsible for the listings people post on their sites.

The bill was pushed by Airbnb, which estimated it could collect about $15 million annually on behalf of the people using its website to rent out rooms in their homes.

But as it moved through the Legislature, lawmakers frustrated with a rash of ads for illegal campsite rentals pushed to require Airbnb and others to verify the legality of their listings, a proposal that ultimately failed.

“When you look at this bill from purely the state’s perspective and the state’s desire to collect state taxes owed, this measure would have provided a mechanism to allow us to achieve this goal,” Ige said at a news conference Tuesday. “However, the use of an intermediary … as the tax collection agent also provided a shield for owners who do not currently comply with county laws … and this was a big concern of mine.”

Right now, Hawaii law says ads for short-term rentals or timeshares must include information such as registration identification numbers. Otherwise, the rental operator or broker could face fines, said Hawaii’s former attorney general David Louie.

That violates the federal Communications Decency Act, which says an internet platform can’t be held liable for its users’ posts, said Louie, who now represents the Internet Association, which includes in its members Facebook, Yelp and Airbnb.

“At heart, the internet is about the free flow of information,” Louie said. “I think and the Internet Association agrees that we should have regulation in this area. That’s a conversation. How do you regulate this?”

The bill would have decreased illegal activity by giving the people renting out their homes a way to pay taxes, Louie said.

Tourism officials say it’s unfair to collect taxes only from hotels and not from others that are in the same business. They had hoped the revenue stream from the state would prompt counties to act on issues like illegal rentals, said Mufi Hannemann, president and CEO of the Hawaii Lodging and Tourism Association.

“That would have been an incentive for the counties to say hey, we can get money out of this,” Hannemann said. “Right now there’s no incentive for the counties to get their act together on this issue.”

Ige also said the bill would have encouraged people to choose transient renters at a time when affordable housing is in short supply, and “the homelessness remaining to be a critical concern statewide.”

Airbnb is collecting taxes in nearly 200 jurisdictions around the world and says dozens more want to do the same.